Conference kernel::csguk_systems

177.0. "MCS Q3 BUSINESS REPORT" by KERNEL::PETTET (Norm Pettet CSC Basingstoke) Thu Apr 28 1994 10:39

From:	LARVAE::LARVAE::MRGATE::"RDGMTS::MROMTS::SALES::A1::RANDO.JOHN" 27-APR-1994 23:56:04.53
To:	@Distribution_List
CC:	
Subj:	MCS Q3 BUSINESS REPORT                                                 3

From:	NAME: John Rando @OGO               
	FUNC: Multivendor Customer Services   
	TEL:                                  <RANDO.JOHN AT A1 at SALES at MRO>
To:     See Below

As I indicated in my recent message to you, MCS did not meet its revenue or 
profit goals for Q3.  We achieved 89% of our revenue and profit plan for 
the quarter with year to date results equaling 94% of revenue plan and 98% 
of our profit plan.  You may have also seen that service revenues declined 
11% from last fiscal year.  In MCS, unfavorable European currencies account 
for two thirds of that decline.  While these results are disappointing, we 
must continue to strive to meet our Q4 commitments through innovative 
revenue generation and expense containment programs.  We must also continue 
to work on our major programs which are driving our transformation to a 
global multivendor service provider.

While our financial results did not meet expectations, we continued to make 
progress in many areas.  One particularly exciting achievement was the 
announcement by InfoWorld that Digital has won the publication's award for 
Best Client/Server Technical Support.  The decision was based on a poll of 
their nationwide readership of 225,000 and the competition was among all 
U.S. multivendor service providers.  This award recognizes Digital's 
commitment to open client/server leadership in the market.  Moreover, it is 
important corroboration from customers of our 'no excuses, no finger-
pointing' message.

There were many other achievements during Q3.  The attached report presents 
some highlights in each of the following areas:

	.Partnerships and Alliances
	.Significant Q3 Wins
	.Major program updates
	.Other Territory/Segment/Functional highlights
	.Financial performance   

Please take a few minutes to read this report and take pride in your 
contributions to MCS and Digital.  In Q4, we all need to support our MCS 
Sales force and help put MCS revenue back on the growth curve.  

Regards,

John



PARTNERSHIPS AND ALLIANCES

During Q3, MCS entered into and expanded existing relationships with 
several partners.  These relationships helped move MCS closer to its 
multivendor vision:


On March 18th, 1994, Digital and WordPerfect signed a worldwide agreement 
which gives Digital the ability to offer support, rights to new version, 
media and documentation, and installation services on all WordPerfect 
products available on all platforms.  WordPerfect is the fifth largest 
independent software vendor in the world.  Five-year service revenue is 
estimated to exceed $50M.


In Q3, MCS signed an agreement with Dell USA.  Under this agreement Digital 
MCS will provide  warranty services on Dell's new Advanced System products
in the U.S.  This supplements our existing relationship with Dell in 
Europe.  Service revenue is estimated to be $3M for the first year of the 
agreement. 


In February, Digital and NeXTStep signed a worldwide agreement which 
enables Digital to sell and service the NeXTStep operating system software 
on two of our high end PCs platforms.  Sales projections in the U.S. are 
15,000 units for 1994.  For MCS this opportunity extends to the entire 
NeXTStep installed base.  In March, the Department of Defense awarded the 
Oakstep contract to Digital.  This win represents the sale of 9,000 DECpc 
XL's running NeXTStep operating system and services on the PCs.  This 
establishes Digital as the vendor of choice for the world's largest 
NeXTStep customer.


In March, Digital and  Presidential Technology Inc. (PTI) entered into a 
worldwide vendor alliance.  This is the first major vendor alliance with 
a company from Taiwan.  Under this agreement Digital will provide worldwide 
ServiceCenter repairs on PTI monitor products.  The projected MCS revenue 
for the initial term of this agreement is in excess of $5M.


In Q3, Digital signed an engineering/distribution/service relationship with 
IBM whereby the IBM CICS/6000 product will be ported to Digital's OSF/1 on 
AXP platforms.  This arrangement increases the credibility of the Alpha 
platform to customers building transaction systems.  This is a significant 
offering which combines the benefits of Alpha AXP's 64 bit architecture 
with the maturity and industry acceptance of CICS, IBM's transaction 
management software.  Five-Year service revenue is estimated to be $18M.



In January, Digital and Target Systems Corporation of Marlboro, MA. signed 
a licensing agreement which allows Target to market, sell and service the 
Digital MCS application known as STARS.   This is the first tools licensing 
agreement that MCS has executed and is forecast to generate $2M during the 
next year.


Digital has outplaced its PDP-11 legacy software products to Mentec 
Corporation Ltd. for maintenance and continuing engineering support.
MCS recently established a relationship with Mentec which creates a full 
service agreement that is estimated to yield $13 M dollars over the next 
four years.  


In March, Digital and Advanced Modular Solutions (AMS) of Concord, MA. 
signed a worldwide maintenance service agreement.  Under this agreement 
Digital MCS will provide on-site warranty services on AMS SuperServer 
products.  This three year agreement is projected to generate $3.3M of MCS 
revenue.



                               Q3 FY94 WINS

The following Q3 Wins demonstrate the breadth of MCS' offerings.  Listed 
below is Company name, Territory/District, Contract Value per Year, and 
indication of the importance of the win to Digital:

							CONTRACT VALUE/YR


<<<     Liberty Mutual - U.S. Northeast District                $750K

Microsoft maintenance service, Help Desk support to over 11,000 PC users.
First major Microsoft win.  Complete single vendor solution at competitive 
prices displacing Corporate Software.


<<<     Hardees Food Systems - U.S. Southern District           $1.8M

Lan Installation services at 1100 of Hardees corporate owned restaurants.


<<<     Dot (Veterans Administration) - U.S. Mid-Atlantic Dist  $400K

Spares order to be delivered in Q3 and Q4.  This Per Event business will 
generate revenue in Q3 and Q4.


<<<     Chrysler Corp - U.S. Central District                   $482K

Multivendor hardware support.  Winback from Per Call maintenance.


<<<     Sony Pictures Entertainment - U.S. Western District     $300K

Hardware and Software desktop service on a worldwide basis.  MCS was the 
first business unit to penetrate this account against competition from 
Xerox, Bell Atlantic, Hewlett-Packard and Computerland.


<<<     Cott Corporation - Canada                               $1.5M

PCI project providing network installation services, hardware installation 
services, learning services, Banyan support and help desk support.  Digital 
is providing 200-300 PC/Server systems to several Cott locations worldwide.


<<<     Presidential Technology, Inc., Taiwan (PTI) - ASIA      $1.0M

Digital was selected as the global service provider for depot/carry-in 
warranty services on a comprehensive range of monitors manufactured by PTI.  



<<<     TOKYO Electron Co - Japan                               $400K

Installation, user training, telephone support and critical onsite services 
for all of Tokyo Electron's endusers.  This win was the result of teamwork 
across DMD Sales, DMD Marketing, MCS Sales, MCS Business and MCS Service 
Delivery groups.


<<<     British Telecom - Terr A, UKI                           $2.8M

Maintenance of all 11 BT Network Admin Center Computer Systems (NACCS), 
including platforms from Digital, Sequent, Pyramid and Sun.


<<<     Allied Bakers at Liverpool - Terr A, UKI                $900K
                                                
Prepaid 5 year service contract for $4.5M.  Allied Bakeries have been 
moving from a Honeywell/Bull environment to Digital VAX for all their 
systems.  This base will allow for further growth to Alpha systems and 
service.


<<<     CS First Boston  - Terr A, UKI				$1.4M
								
Multi-year contract to support the entire desktop environment including 
hardware, software, and network support for over 2000 PCs and their 500 
position, SUN based trading floor.  The onsite team and client manager will 
also deliver inventory management and applications support.


<<<     Turner & N. - Terr C, Germany                           $200K

Desktop service and software hotline for over 1000 PCs and printers for 
this automotive industry supplier.  Additional opportunities exist for 
integration services and desktop support for other Turner & N companies.
Win was against IBM, ICL Sorbus, Siemens-Nixdorf, etc.  


<<<     Banco de Santander - Terr D, Spain                      $1.8M

Maintenance on all hardware installed in the bank's 1500 branches, (22,000 
desktop devices including controllers, printers, PCs, check readers, teller 
assist machines and terminals).  This contract displaced three service 
providers; Dirtesa, owed by Banco de Santander, ELTEC, the leading TPM in 
the Spanish market and IS2.  (This win, closed at the end of Q2, was 
submitted too late for the last report).



<<<     Intergraph - Terr D, Holland                            $1.6M

Repair of Digital spares, multivendor spares and warranty claim management.


<<<     GEMEENTERKREDIET - Terr D, Belgium                      $1.1M

Installation, integration, and product maintenance for Retail Banking 
company with 1000 branches.


<<<     Schweiz. Volksbank Bern (SVB) - Terr D, Switzerland     $685K

This business increments the current maintenance contract and covers 
equipment that was previously "self serviced".


<<<     Agip Petroli S.P.A. - Terr E, Italy                     $700K

PC relocation, add-on installation, hardware maintenance, call handling, 
and configuration tracking reports for an IT environment with 2500 
multivendor PC stations and peripherals.  Agip Petroli is the most 
important petrochemical company in Italy.


	


                           MAJOR PROGRAM UPDATES

The following key MCS programs are critical to MCS success in FY94 and 
beyond:
        .MCS Service Menu
        .MCS Selling Model
        .Service Delivery Re-engineering
        .Global Common Solutions
        .MCS Transformation 
        .Add-On Incentive Program

The following program milestones were achieved in Q3:


<<<     MCS Service Menu

During Q3, territory implementation of Release 1 of the service menu was 
completed.  Fifteen consistent global offers became available for selling 
and delivery on February 28.

Design phase exit for Release 2 was achieved on schedule at the end of Q3. 
Eight new offers and four revisions to Release 1 offers are part of Release 
2.  Release 2 implementation planning efforts began in all Territories 
during March.

SSS Release 2 menu offers were finalized for LAN Management, 
Interoperability Testing and System HealthCheck. These offers extend our 
multivendor capability for LAN and System Management services and will 
significantly position MCS to meet customer needs based on the MCS Customer 
Validation performed by Dataquest.


<<<     MCS Selling Model

Improvements to the MCS sales model continue to be made.  The UK is currently 
piloting the Base Sales process and all other European Territories have 
committed to Q4 pilots.  

Consistent Frontlog and Certification definitions have been developed.  During 
Q3, a Frontlog system was rolled out to APA and Europe.  Data is beginning to 
flow into the system.

Based on US, Europe, and APA requirements, a sales systems and tools strategy 
has been developed.  The first tool to be rolled out is the Sales Organizer, 
which is a sales leads and work productivity tool.



<<<     Service Delivery Re-engineering

Within the MCSD process management infrastructure, Process Improvement Teams 
completed process walkthroughs and process maps for multiple worldwide 
locations for each of the seven major service delivery processes.  These maps 
will be used as a basis to create a set of integrated process baselines that 
will drive consistent worldwide service delivery processes throughout MCS. The 
ABC Flowcharter process benchmarking software is being used to  support the 
process mapping efforts of both the local MCS managers and the MCSD worldwide 
process managers.  

In Q3, MCS and Ziff Communications Company, parent company of Ziff Davis 
Publishing, entered into a strategic alliance to explore a number of 
significant joint business opportunities.  These include reseller agreements, 
manufacturing, new market development technology and global support.  MCSD took 
the first step in this partnership by licensing use of Ziff's multivendor 
information databases for use in support of existing and new service menu 
offerings for Desktop and Local Area Network (LAN) solutions.


<<<     Global Common Solutions (GCS)

The first release of the GCS Program Plan was published on January 28th. 
The first drafts of both the Information Management Strategy and the GCS 
Business Process Model were also completed.  A 4th focus area, MCS Sales, 
has been added which expands the GCS program scope to include process 
activities from Customer Engagement, Service Logistics, Call Handling, 
and Obligation Management.

SAP/R3 was selected as the future Services Logistics solution platform.
Service Delivery completed a revised plan which shows the consolidation of 
Call Handling systems occurring 9 months earlier than the previous plan.


<<<     MCS Transformation Process

During Q3, MCS launched the MCS Transformation Process which was developed 
by the MCS Quality Team.  The MCS Transformation Process is a long-term 
plan designed to build organizational transformation skill in leaders (The 
Leadership Forum) while engaging our workforce in discussion and actions 
which will build capacity for positive change within our environment (The 
Change Forum).    

The Transformation Process kickoff was held on February 4th in Reading, 
England which included an overview of the Transformation Process as well as 
a Vision Engagement Workshop.  Fifty employees from the U.K. joined the 
Territory Managers and MCSLT  in a rich discussion on how we will turn our 
vision into reality.  John Rando indicated his support of this program by 

stating, "I'm committed to this work, and you can count on me to nurture 
the vision, to complete and support the Leadership Forum training, and to 
engage in discussions with the Service Professional of MCS around the globe 
about how we'll work together to bring this vision to life."

The MCS Headquarters Change Forum process has begun.  The first two monthly 
meetings focused on "Why we have to Change" and "An examination of our
Vision".  Territory Change Forum deployment has been approved by the three 
areas, and local implementation strategies are currently being developed. A 
consistent Change Form curriculum is being packaged which will contain 80% 
fixed format and allow for 20% local customization.  This will ensure that 
all MCS employees receive similar training regardless of their location.


<<<     Add-On Incentive Program
    
Once again MCS employees made a significant contribution to Digital's 
products business.  During Q3, MCS worldwide employees generated 13,000 
leads, 3,900 of which converted to orders.  These orders generated $62.5M 
of incremental revenue for Digital.  Year to date, MCS employees have 
submitted 32,000 leads which resulted in 8,000 orders and $150M of 
incremental revenue for Digital.


            OTHER AREA/TERRITORY/SEGMENT/FUNCTIONAL HIGHLIGHTS

In addition to the major programs in the previous section, there were many 
other highlights in Q3, some of which are listed below:


<<<	In the Financial Reporting area:

The Finance organization led the development of the Long Range Plan 
Business Models and Cash Flow Statements. The Business Models allow 
management to further understand:
	o profitability differences of the core business segments MCS 
	  currently engages in. 
	o the impact to profit as business mix shifts towards multivendor    
	  solutions.
	o the significant MVS revenue growth requirements/challenges.
	o our competitive position, relative strengths and areas requiring
	  development.

The Cash Flow models, while in their beginning stages, enable management to 
understand sources and uses of cash and the MCS contribution to Digital's 
critical working capital requirements.  Further development of this model 
will ensure the MCS asset management strategy supports the Multivendor 
Service strategy. 



<<<	In the Policy Management area:

The Digital Product Warranty Policy was approved in Q3 and program 
implementation activities have begun.  This policy brings the total 
worldwide policies to six:  
	Multivendor Customer Service Policy Management System
	Pricing for Packaged Services
	Hardware Length of Service
	Diagnostic Software License
	International Allowances
	Digital Product Warranty
Updates to policies and related implementation material are instantly 
available to any user worldwide through VTX.



<<<	In the Tools and Processes area:

Phase 1 roll-out of the SSS Systems and Tools Program was completed in the 
US and APA.  Europe will be completed during Q4. Phase 1 consists of  
providing SSS Specialty Sellers and LAN Consultants with hardware, 
software, and custom statement of work proposal tools.  The next two phases 
will provide a technical architecture and connectivity to the system 
infrastructure.

<<<     Tools and Processes, Continued:

Americas MCS developed and completed implementation of the Per Event 
Administration and Reporting System (PEARS) in the U.S. during Q3.  The 
Canada and Latin America Caribbean Territories are in the planning stage.
PEARS is an automated system which allows for the efficient collection and 
preparation of per event data and the subsequent transmission to the Single 
Invoicing System (SIS).  Significant benefits are:  a decrease in the call 
closure date to the invoice date from 70 to 12 days; an additional four 
days of processing time for end-of-month invoicing; per event operations 
and management reporting; consistent labor and material pricing; 
centralized account invoicing and an automated process from call closure to 
invoice. 

MHS implemented a worldwide Spares control process to centralize expanded 
spares pricing, ordering and invoicing.  This gives MCS worldwide global 
consistency in the pricing of spares as well as a more efficient ordering 
and invoicing process.  

MHS identified an external capability through Claim Administrative 
Services, a company utilizing  EDI functionality for the distribution of 
warranty reimbursements.  This moves us into a better competitive 
position with our partners as this process is the industry standard.



<<<	In the Productivity area:

There were many cost reduction programs instituted in Q3.  Two of the most 
noteworthy were significant cost savings achieved in Logistics and the 
productivity gains achieved within the Product Service Management Group 
(PSMG).  In Logistics, the worldwide Repair Consolidation program delivered  
savings of approximately $2.8M and MCS Logistics participation in the 
Corporate Acquisition program delivered another cost savings of $4M in 
Spares/Repairs.  In PSMG, a restructuring effort which will bring about 
significant modifications to the process and work performed resulted
in a 34% reduction of PSMG expenses which will begin in Q4.




                        MULTIVENDOR CUSTOMER SERVICES
                        FINANCIAL RESULTS AS % OF PLAN
                        RANKED BY Q3 % OF MARGIN PLAN
                                   
                                    




                                        --- Q3FY94 ---  --- Q3YTD ---
					NOR    MARGIN 	NOR    MARGIN
                                       %PLAN   %PLAN   %PLAN   %PLAN

Japan					109%	122%	110%    119%
Asia 					100%	120%	 99%	112%
Canada					 95%	104%	 90%	 97%
LACT					100%	100%	106%	106%
SPT					 91%	 91%	 93%	 99%
Terr A - UKI				 90%	 90%	 92%	 91%	
Terr D - Nor,Bene,Swi,Spain,Portugal   	 86%	 89%	 94%	104%
USA					 90%	 85%	 92%	 92%
Terr E - Italy,Greece,Middle East	 81%	 82%	 87%	 83%
Terr B - France				 77%	 76%	 87%	 88%
Terr C - Germany,Austria, E.Eur		 79%	 63%	 84%	 72%


TOTAL TERRITORIES NOR AND MARGIN	 88%	 89%	 92%	 94%	


TOTAL MCS WORLDWIDE				 89%		 98%



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